Expansion supported by President Moon's focus on renewable energy
SEOUL -- South Korean makers of solar power equipment are expanding into Japan as a step towards building a broader international presence.
South Korean conglomerate LS group has teamed up with Korea Electric Power, a government-owned utility, to operate a solar farm on Japan's northernmost main island, Hokkaido.
Another conglomerate, Hanwha group, has provided equipment for a solar park that a company affiliated with Kyushu Electric Power started operating in Saga Prefecture in April.
The South Korean companies plan to use their experience in Japan, where quality standards are high, to help power their global expansion drive.
Their overseas drive is receiving strong support from South Korean President Moon Jae-in's policy of promoting renewable energy to reduce nuclear power generation in the country.
In autumn last year, LS and Korea Power began to operate a 28 megawatt solar plant in Hokkaido, one of the largest on the island.
The ceremony to celebrate the completion of the solar farm was attended by top executives of LS and Korea Electric, including LS Chairman and CEO Christopher Koo, who is a scion of the founding family; and Cho Hwan-eik, then president of Korea Electric.
The solar power station in Chitose, Hokkaido, features 130,000 solar panels, provided by LS, on a 1.08 sq. km plot of land and is Korea Electric's first overseas power plant. it is equipped with energy storage systems, which are not common in Japan, and has cost 11.3 billion yen ($105 million) to build. Power generated at the plant is used by Hokkaido Electric Power.
"Japan is one of the world's three leading solar power markets along with the U.S. and China," said an LS executive. The conglomerate wants to use what it learns from its Japan venture into expansion into other growing overseas markets such as Southeast Asia, according to the executive.
In 2012, Japan introduced a feed-in tariff system, which requires established public utilities to buy power from wind, sun and other renewable energy sources at government-set prices for certain periods of time.
The program triggered a solar power boom in Japan but has since been modified to make solar power generation less lucrative. The price at which utilities must purchase renewable electricity was lowered sharply from the initial 40 yen per kilowatt-hour to 24 yen in 2016. A reform of the program further pushed down the price to around 20 yen in 2017.
The Japanese market is still attractive, however, according to a Hanwha executive.
The group's Hanwha Q Cells provides photovoltaic modules to a solar power station in Saga Prefecture built by Kyudenko, a Kyushu Electric Power affiliate, and trading giant Itochu. The 20MW plant came onstream in April.
Hanwha was drawn to Japan because of its highly diversified market for solar power equipment, with customers ranging from households to companies, the Hanwha executive said. The group expects its experiences in the country will give it a leg up in its forays into other markets such as China and Turkey, according to the official.
LG group has won an 18 billion yen contract to design and build a 55MW solar farm a Canadian utility will start running in Yamaguchi Prefecture in May.
In South Korea, six government-affiliated electric utilities, including Korea Electric subsidiary Korea Hydro & Nuclear Power, announced in 2017 a plan to spend a total of 45 trillion won ($42 billion) by 2030 to ramp up renewable power generation.
Under the plan, they will build power stations capable of generating 33 gigawatts of electricity, almost triple the overall renewable power generation capacity in the country.
The huge investment is a response from the country's electric power industry to Moon's pledge to reduce the number of nuclear reactors in South Korea to 14 by 2038 from the current 24.
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